Armenia: Amulsar gold mine poses high risk of water contamination & adverse environmental impacts, say experts; inc. company & shareholders' responses

The report "Amulsar Gold Project: Overview of Concerns with the Amulsar Gold Project, Potential Consequences, and Recommendations" by independent experts argues the Amulsar gold mine project, owned by Lydian International, poses a high risk of long-term, adverse impacts to the environment, including drinking water resources in Armenia.

Business & Human Rights Resource Centre invited the company and its reported shareholders to respond. Lydian International, RBC Asset Management, European Bank for Reconstruction & Development (EBRD) and Resource Capital Funds responded. Orion Mine Finance, Franklin Resources Inc., Donald Smith & Co., Amber Capital and ASA Gold & Precious Metals Limited did not respond.

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Company response
22 February 2018

Response by Resource Capital Funds

Author: Resource Capital Funds

...RCF understands the inherent risks associated with mining and therefore proactively engages its portfolio companies regularly to ensure that strategies are in place to mitigate ESG-related risks and recognize opportunities. RCF monitors Amulsar’s ESG activities on a regular frequency and actively engages with its environmental and social team. RCF believes that the Project design and management systems align with industry best practice and that Lydian continuously strives to create a transparent process for information sharing with its stakeholders. Lydian has committed to comply with international standards throughout construction, operation and closure...

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Company response
19 February 2018

Response by Lydian International

Author: Lydian International

...The Amulsar project has been subject to an extraordinary amount of compliance oversight and review to ensure it meets or exceeds best international practice. The Environmental and Social Impact Assessment (“ESIA”) has undergone ten iterations, over six years, to arrive at the current version. An Independent Environmental and Social Consultant (“IESC”) appointed as third party, has regularly audited the project to ensure compliance with the standards and performance requirements of both the IFC and EBRD. Five external audits were carried out in 2017 alone and found the project to be compliant. The IESC has also specifically reviewed the BCB communications and responses and found that Lydian has appropriately addressed all concerns. Finally, a level of oversight which is quite unique to the Amulsar project, even by international standards, is an Independent Advisory Panel (“IAP”) which is comprised of distinguished professionals from around the world, including Armenia, who convene to provide oversight to the project, independent of the Company and the shareholders. The Amulsar Project is meeting or surpassing international standards for the advancement of the project, which is now in its final stage of construction. We maintain a firm belief that Amulsar is a major part of the development opportunity for Armenia and that the project will establish new standards in areas of social and environmental management in mining.

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Article
13 February 2018

About gold mine project in Amulsar presented by Lydian International

Author: Armenian Environmental Front (AEF) civil initiative

...The Bronozian Consultants have conducted a series of reviews of the Amulsar Gold Project in Armenia over the past eight months. The overall purpose of our work has been to provide a critical, detailed, and independent technical evaluation of the project aimed at identifying the potential operational and long- term consequences of the mine...Our overall conclusion remains that the high risk of acid drainage and contaminant leaching, the poor geochemical evaluation, the inadequate water quality predictions and mitigation measures and Lydian’s inexperience combine to make this an environmentally high-risk project during mining and for a lengthy period after operations cease. We are also concerned about public statements made by Lydian that the deposit is completely oxide, which erroneously implies that acid rock drainage (ARD) will not develop during or after mining. These statements do not reflect the reality of the situation on Amulsar Mountain if the mine is developed as planned. Accurate statements regarding the acid-forming components in this deposit from Lydian must be mandatory...

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Company non-response
13 February 2018

Amber Capital did not respond

Report
13 February 2018

Amulsar Gold Project: Overview of Concerns with the Amulsar Gold Project, Potential Consequences, and Recommendations

Author: Blue Minerals Consultancy, Buka Environmental & Clear Coast Consulting

...The focus has been on the potential effects of the project on water resources, commonly the most critical and long-term environmental concern for large-scale
metal mines...The evaluation has found that the Amulsar Gold Project, as proposed, poses a high risk of long-term, adverse impacts to the environment. Our strong recommendation to the government of Armenia and its citizens is that the mine not be developed until the identified shortcomings are corrected...The highest priority concerns and consequences for development of the Amulsar Gold Project...are as follows: Contamination of downgradient groundwater, streams, springs, reservoir, tunnel from acid rock drainage and contaminant leaching that will last for centuries...Inadequate and incorrect geochemical evaluation of wastes and ore; underestimation of acid drainage and contaminant leaching potential of mined materials and negative impacts to the environment...The conclusion drawn by the Bronozian Consultants is that the high risk of acid drainage and contaminant leaching, the poor geochemical evaluation, the inadequate water quality predictions and mitigation measures, Lydian’s inexperience, and the insufficient financial guarantee combine to make this a high risk project during mining and for hundreds of years after operations cease...

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Company non-response
13 February 2018

ASA Gold & Precious Metals Limited did not respond

Company non-response
13 February 2018

Donald Smith & Co. did not respond

Company non-response
13 February 2018

Franklin Resources Inc. did not respond

Company non-response
13 February 2018

Orion Mine Finance did not respond

Company response
13 February 2018

Response by European Bank for Reconstruction and Development (EBRD)

Author: European Bank for Reconstruction and Development (EBRD)

...The EBRD is a minority shareholder and has provided equity financing to Lydian International, which is earmarked for Environmental and Social Mitigation Measures including the financing of a biodiversity off set programme and the construction of water treatment facility and related activities. We would like to emphasise that the Amulsar Gold Mine Project is being developed in line with the policies of its shareholders through which the shareholders, including the EBRD, commit to integrating environmental, social and governance matters into their investment processes and ownership activities in line with international best practice...With specific regard to the reports produced by Mr Bronozian and associated specialists, in particular the concerns relating to the potential for Acid Rock Drainage (ARD), Lydian International has presented a technical paper responding to the claims point by point. EBRD’s internal specialists have reviewed these responses and also sought independent technical and environmental advice. The experts have confirmed that the potential for ARD occurring has been appropriately addressed and that the Company’s response was based on sound technical and environmental grounds. Overall, EBRD is confident that the Amulsar Gold Mine Project’s design, management systems and stakeholder engagement activities align with industry best practice and Lydian International has committed to continue to comply with international standards throughout construction, operation and closure of the mine.

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